Capital accumulation, overlapping generations and dynamic efficiency in pension funding

This paper considers dynamic efficiency and income distribution using an overlapping generation model of economic growth. The issues discussed within this framework intend to shed light on an ongoing debate in most developed countries: the reform in funding the retirement pension schemes. Private saving or compulsory distribution of income working independently of one another cannot achieve optimality. A flexible framework for policy action hinges on providing a mix of private saving and the adequate share of state sponsored security system.